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Lyft

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Lyft, Inc.
Company typePublic
IndustryVehicle for hire
FoundedJune 9, 2012; 12 years ago (2012-06-09) (as Zimride)
Founders
Headquarters185 Berry Street, Suite 5000 San Francisco, California, U.S. 94107
Area served
  • United States
  • Canada
Key people
RevenueIncrease US$4.40 billion (2023)
Negative increase −US$476 million (2023)
Negative increase −US$340 million (2023)
Total assetsIncrease US$4.56 billion (2023)
Total equityIncrease US$541 million (2023)
Number of employees
2,945 (2023)
Subsidiaries
Websitelyft.com
Footnotes / references
[1]
Lyft's pink car mustache
Lyft's distinctive pink mustache was the first branding the company used until 2015 when it switched to a smaller, glowing magenta mustache that sits on a driver's dashboard.

Lyft, Inc. is an American company offering ride-hailing services, motorized scooters, bicycle-sharing systems, and rental cars in the United States and select cities in Canada.[1][2] Lyft sets fares, which vary using a dynamic pricing model based on local supply and demand at the time of the booking and are quoted to the customer in advance, and receives a commission from each booking. Lyft is the second-largest ridesharing company in the United States after Uber.[1]

History

[edit]
A Lyft vehicle in Santa Monica, California, with the original grill-stache branding, since retired

Lyft was launched in the summer of 2012 by computer programmers Logan Green and John Zimmer as a service of Zimride, a long-distance intercity carpooling company focused on college transport that they founded in 2007 after Green shared rides from the University of California, Santa Barbara campus to visit his girlfriend in Los Angeles and was seeking an easier way to share rides.[3][4]

In May 2013, the company changed its name from Zimride to Lyft.[5] In July 2013, Lyft sold the original Zimride service to Enterprise Holdings, the parent company of Enterprise Rent-A-Car.[6]

Lyft's marketing strategy included large pink furry mustaches that drivers attached to the front of their cars and encouraging riders to sit in the front seat and fist bump with drivers upon meeting.[7] In November 2014, the company distanced itself from the fist bump.[8] In January 2015, Lyft introduced a small, glowing plastic dashboard mustache it called a "glowstache" as an alternative to the large fuzzy mustaches on the front of cars. The transition was to help overcome the resistance of some riders to arrive at destinations, such as business meetings, in a car with a giant mustache.[9]

In August 2014, the company introduced shared transport.[10]

In December 2017, Lyft expanded into Canada, with operations in the Toronto, Hamilton and Ottawa metropolitan areas.[11]

In March 2018, Lyft partnered with Allscripts on a platform allowing healthcare providers to arrange rides for patients who lack transportation to appointments with plans to roll out the service to 2,500 hospitals, 180,000 physicians, and approximately 7 million patients.[12][13] Lyft acquired Motivate, a bicycle-sharing system and the operator of Capital Bikeshare and Citi Bike, in November 2018.[14][15] The company also announced plans to add 28,000 Citi Bikes and expand its service.[16]

In March 2019, Lyft became a public company via an initial public offering, raising $2.34 billion at a valuation of $24.3 billion.[17] The company set aside some shares to be given to long-time drivers.[18]

In March 2020, Lyft acquired Halo Cars which pays drivers to display digital advertisements on their vehicles.[19] In April 2020, during the COVID-19 pandemic in the United States, Lyft laid off 982 employees and furloughed an additional 288 to reduce operating expenses.[20] The company continued to offer scooters for rent in San Francisco, while Miami government asked Lyft to halt operations.[21]

In August 2020, Lyft partnered with rental car company Sixt to provide users access rental cars, in exchange for a commission. Most of the rental cars are owned and operated by Sixt, with 85 locations in the U.S.[22][23]

In December 2020, Lyft announced plans to launch a multi-city U.S. robotaxi service with Motional.[24] Lyft sold its self-driving car division to Toyota for $550 million in April 2021.[25][26] The division had partnerships with General Motors,[27][28] NuTonomy,[29] Ford Motor Company,[30][31] GoMentum Station,[32] and Magna International.[33] It also owned Blue Vision Labs, a London-based augmented reality startup, acquired in 2018 for $72 million.[34]

In April 2022, Lyft announced an agreement to acquire PBSC Urban Solutions, a Canadian bike-share equipment and technology supplier.[35] In November 2022, the company announced layoffs of approximately 700 employees, or about 13% of its staff.[36]

In March 2023, David Risher was named CEO of the company.[37][38]

In April 2023, the company announced layoffs of 1,076 corporate workers, or 26% of its staff. This came after job cuts announced in July and November 2022.[39][40][41]

In September 2023, Lyft discontinued Lyft Rentals and stopped offering car rental services. [42]

In August 2024, Lyft announced it had achieved GAAP profitability for the first time in the company’s history, owing to highest-ever rider numbers and increased market share.[43][44]

Criticism

[edit]

Lyft classifies its drivers as independent contractors, a practice that has drawn criticism and legal challenges because it allows the company to withhold worker protections that it would have been required to provide to employees.[45][46] Studies have shown that, especially in cities where it competes with public transport, Lyft contributes to traffic congestion, reduces public transport use, has no substantial impact on vehicle ownership, and increases automobile dependency.[47][48][49]

The legality of ridesharing companies by jurisdiction varies; in some areas they are considered to be illegal taxicab operations.

See also: Sharing economy § Criticism, and Temporary work § Legal issues
Airports in California, such as the San Francisco International Airport, regulate where TNC (Transportation Network Companies - the legal term for rideshare companies in California) vehicles may pick up, drop off, or wait for passengers.

Criticism from taxi companies and taxi drivers

[edit]

Values of taxi medallions, transferable permits or licenses authorizing the holder to pick up passengers for hire, have declined in value significantly. In 2018, this led to failures by credit unions that lent money secured by taxi medallions[50] and suicides by taxi drivers.[51][52]

[edit]

No lawsuit against Uber in which the plaintiffs were taxi companies has ended with a judgment in favor of the taxis. The only case that proceeded to trial, Anoush Cab, Inc. v. Uber Technologies, Inc., No. 19-2001 (1st Cir. 2021), which alleged that Uber caused asset devaluation by competing unfairly, resulted in a full verdict for Uber.[53]

Flywheel, the largest operator of taxis in San Francisco, sued Uber in 2016, alleging antitrust violations and predatory pricing.[54] In 2021, a federal judge threw out the bulk of the case and Uber settled the remainder of the case by integrating Flywheel taxis into its mobile app.[55]

In 2019, 8,000 taxi drivers, represented by law firm Maurice Blackburn, filed a class action lawsuit against Uber in Australia alleging illegal taxi operations, loss of income and loss of value of taxi and/or hire car licences. Uber agreed to settle the case by paying AU$271.8 million.[56]

[edit]

Driver classification under employment law

[edit]

Unless otherwise required by law, ridesharing companies have classified drivers as independent contractors and not employees under employment law, arguing that they receive flextime not generally received by employees. This classification has been challenged legally since it affects taxation, minimum wage requirements, working time, paid time off, employee benefits, unemployment benefits, and overtime benefits.[57]

Jurisdictions in which drivers must receive the classification of "employees" include the United Kingdom (after the case of Aslam v Uber BV which was decided by the Supreme Court of the United Kingdom),[58][59] Switzerland,[60] New Jersey,[61] and the Netherlands.[62][63] California Assembly Bill 5 (2019) was passed to force drivers to be classified as employees in California, although ridesharing companies received an exemption by 2020 California Proposition 22, a ballot initiative.[64] Ridesharing companies spent tens of millions of dollars on the campaign.[65][66]

In some jurisdictions, laws were passed to guarantee drivers a minimum wage before and after expenses as well as paid time off and insurance benefits.[67][68] Uber has paid to settle accusations of having misled drivers about potential earnings[69][70][71] and shortchanging drivers.[72][73][74][75]

Price fixing allegations

[edit]

In the United States, drivers do not have any control over the fares they charge. A lawsuit filed in California, Gill et al. v. Uber Technologies, Inc. et al., alleged that this is a violation of the Sherman Antitrust Act of 1890. The lawsuit was denied class action status; a judge forced each plaintiff to go to arbitration individually. The case was dropped in March 2024.[76][77]

Safety issues

[edit]

Crimes have been committed by rideshare drivers[78] as well as by individuals posing as rideshare drivers who lure unsuspecting passengers to their vehicles by placing an emblem on their car or by claiming to be a passenger's expected driver.[79] The latter led to the murder of Samantha Josephson and the introduction of Sami’s Law. Ridesharing companies have been accused of not taking necessary measures to prevent sexual assault.[80][81] They have been fined by government agencies for violations in their background check processes.[82][83][84]In 2019, more than 34 women sued Lyft in the United States alleging that they were raped or assaulted by Lyft drivers, and that the company did not do enough to keep them safe[85] and that Lyft attracts drivers that plan to prey on vulnerable women.[86] Many women claim that, even after they reported their assault to Lyft, the company ignored their report and continued to allow the assailants to drive with Lyft.[87]

Ridesharing has also been criticized for encouraging or requiring phone use while driving. To accept a fare, some apps require drivers to tap their phone screen, usually within 15 seconds after receiving a notification, which is illegal in some jurisdictions since it could result in distracted driving.[88]

Ridesharing vehicles in many cities routinely obstruct bicycle lanes while picking up or dropping off passengers, a practice that endangers cyclists.[89][90][91]

Insufficient accessibility

[edit]

Ridesharing has been criticized for providing inadequate accessibility measures for disabled people, in violation of local laws.

In some areas, vehicle for hire companies are required by law to have a certain amount of wheelchair accessible vans (WAVs) in use. However, most drivers do not own a WAV, making it hard to comply with the laws.[92]

While ridesharing companies require drivers to transport service animals, drivers have been criticized for refusal to transport service animals, which, in the United States, is in violation of the Americans with Disabilities Act. In 2021, an arbitrator awarded $1.1 million to a visually impaired passenger who travels with a guide dog because she was denied rides 14 separate times.[93]

Driver bias against passengers in certain demographic groups

[edit]

Several audit studies of ridehailing companies have been conducted by researchers around the U.S. While these studies do find evidence that ridehailing drivers discriminate against riders on the basis of race (and in one of the studies, alliance with LGBT groups), two of the studies which also examined taxis found suggestive evidence that rates of discrimination by taxi drivers are significantly higher than by ridehailing drivers.[94][95] The two studies that compare rates of discrimination in ridehailing services to taxis include an audit study set in Los Angeles in 2017 and another in Boston in late 2015 to 2016.

In the study set in Los Angeles, the author had participants of different races request rides from Uber, Lyft, and taxis. She found that Black riders were 73% (11 percentage points) more likely to have a taxi driver cancel on them than White riders. On the other hand, she found that Black riders were only 4 percentage points more likely to be cancelled on by an Uber driver than White riders (there was no statistically significant difference in likelihood for Lyft).[95]

The Boston study notes that, at least at the time that the study was conducted, Lyft drivers were able to see all information in a rider's profile (including their uploaded photo and name) when reviewing a ride request; on the other hand, Uber drivers were only able to see a rider's name (and not their picture) after accepting a ride request. Thus, in the Boston study, riders were assigned distinctly "African American sounding names" and "white sounding names" to use when requesting a ride from both Uber and Lyft. Uber's setup of not allowing drivers to see rider's names till after a ride was accepted meant that the authors could quantify rates of discrimination by keeping track of how often riders assigned white sounding names were cancelled on compared to those assigned African American sounding names. In the end, the authors found that the riders assigned African American sounding names were more than twice as likely to get cancelled on as those assigned White sounding names. Despite this large disparity across the two groups, the authors found that there was no statistically significant difference in how long each group had to wait for a driver to arrive.[94]

In 2024, a study by researchers at Carnegie Mellon University was published that focused on explaining why African American and White riders could experience such different cancellation rates but very similar wait times. Using an agent-based model developed to simulate real Uber and Lyft trips that have occurred in the city of Chicago (one of the most residentially segregated cities in the U.S.), they found that the rapid rematching speed of Uber and Lyft drivers after a cancellation drastically reduces the effect of that cancellation on a rider's wait time. However, the paper also found that ridehailing services were not able to overcome the effects of residential segregation in a city; even when no drivers were cancelling on riders because of their race, the authors found that Black riders were waiting around 50% longer on average than White riders.[96]

In addition to the studies discussed in detail above, a 2018 study in Washington, D.C. found that drivers cancelled ride requests from African Americans and LGBT and straight ally passengers (indicated by a rainbow flag) more often, but cancelled at the same rate for women and men. The higher cancellation rate for African American passengers was somewhat attenuated at peak times, when financial incentives were higher.[97][98]

Traffic congestion

[edit]

Studies have shown that especially in cities where it competes with public transport, ridesharing contributes to traffic congestion, reduces public transport use, has no substantial impact on vehicle ownership, and increases automobile dependency.[47][99][48][49]

Dead mileage specifically causes unnecessary carbon emissions and traffic congestion.[100] A study published in September 2019 found that taxis had lower rider waiting time and vehicle empty driving time, and thus contribute less to congestion and pollution in downtown areas.[101] However, a 2018 report noted that ridesharing complements public transit.[102] A study published in July 2018 found that Uber and Lyft are creating more traffic and congestion.[103][104][105] A study published in March 2016 found that in Los Angeles and Seattle the passenger occupancy for Uber services is higher than that of taxi services, and concluded that Uber rides reduce congestion on the premise that they replace taxi rides.[106] Studies citing data from 2010 to 2019 found that Uber rides are made in addition to taxi rides, and replace walking, bike rides, and bus rides, in addition to the Uber vehicles having a low average occupancy rate, all of which increases congestion. A 2021 study found that shifting private vehicle travel to ridehailing services can reduce air pollution costs, on average, but the increased costs from crash risk, congestion, climate change and noise outweigh these benefits.[107] This increase in congestion has led some cities to levy taxes on rides taken with ridesharing companies.[108] Another study shows that the surge factor pricing mechanism used for ridehailing services are informative for predicting taxi bookings as well, and that taxis incorporating this relative price can improve allocative efficiency and demand prediction.[109]

A study published in July 2017 indicated that the increase in traffic caused by Uber generates collective costs in lost time in congestion, increased pollution, and increased accident risks that can exceed the economy and revenue generated by the service, indicating that, in certain conditions, Uber might have a social cost that is greater than its benefits.[110]

Unwanted text messages

[edit]

In November 2018, Lyft settled a class action suit filed in 2014 alleging that the company had sent large numbers of unwanted commercial text messages.[111] In addition to $4 million in payments to consumers, the plaintiffs sought $1 million in legal fees.[112]

See also

[edit]

References

[edit]
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